TaxTMI 
TaxTMI 
2024 (5) TMI 708
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...., Barnala vs CIT, Patiala, whereby the order dated 26.03.2010 passed by the Commissioner of Income Tax, Patiala (hereinafter to be referred as "the Commissioner") was quashed and the registration granted to the assessee in terms of Section 12A of the Act vide order dated 04.07.1997 has been restored. 2. ITA No. 94 of 2011 has been filed by the Revenue before this court under Section 260A of the Act against the order dated 16.07.2010 passed by the ITAT in ITA No. 281/CHD/2010 - Baba Banda Singh Bahadur Education Trust, Fatehgarh Sahib vs CIT, Patiala, whereby the order dated 02.03.2010 passed by the Commissioner was quashed and the registration granted to the assessee in terms of Section 12A of the Act vide order dated 22.11.1993 has been restored. 3. Facts relating to ITA No. 94 of 2011 are being noticed for disposal of the appeal which raise common questions. 4 Learned counsel for the Revenue submitted that assessee - Baba Banda Singh Bahadur Education Trust is an Educational Trust claiming to be engaged in charitable activities by providing financial assistance to poor and needy students by way of fee concession. It filed an application under Section 12A of the Act and the sam....
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....issioner even to cancel registration of institutions under Section 12A of the Act. Thus, on the day when the registration was cancelled i.e. on 02.03.2010, the power was not vested with the Commissioner and, therefore, it proceeded to quash the order of the Commissioner dated 02.03.2010 (Annexure A-2) and restored the registration granted to the institution under Section 12A of the Act dated 22.11.1993. 9. The arguments advanced by learned counsel for the Revenue is that the power of cancellation of registration is impliedly inherent in the authority who granted the same earlier and even if the express power was conferred from 01.06.2010, impliedly power was always available with the Commissioner. Hence, it is submitted that the order passed by the ITAT is unjustified. It also relied on the judgment passed by the Calcutta High Court in Ananda Marga Pracharaka Sangha vs CIT (1995) 218 ITR 254 (Cal.) to submit that the amendment only made patent what was earlier latent in the proviso. He further submitted that the educational institution was engaged in profit making as is evident from the accounts. 10. Learned counsel for the Revenue further submitted that ITA No. 21 of 2011 prefer....
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....f the trust or institution is made after the expiry of the period aforesaid, the provisions of sections 11 and 12 shall apply in relation to the income of such trust or institution,- (i) from the date of the creation of the trust or the establishment of the institution if the Principal Commissioner or Commissioner is, for reasons to be recorded in writing, satisfied that the person in receipt of the income was prevented from making the application before the expiry of the period aforesaid for sufficient reasons; [Substituted by Act 49 of 1991, Section 7, for the proviso (w.e.f. 1.10.1991).] (ii) from the 1st day of the financial year in which the application is made, if the] Certain words omitted by Act 27 of 1999, Section 8 (w.e.f. 1.6.1999).][Commissioner is not so satisfied:][Substituted by Act 49 of 1991, Section 7, for the proviso (w.e.f. 1.10.1991).] [Provided further that the provisions of this clause shall not apply in relation to any application made on or after the 1st day of June, 2007;] (aa) [the person in receipt of the income has made an application for registration of the trust or institution on or after the 1st day of June, 2007 in the prescribed form an....
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....ication; (vi) in any other case, where activities of the trust or institution have- (A) not commenced, at least one month prior to the commencement of the previous year relevant to the assessment year from which the said registration is sought; (B) commenced and no income or part thereof of the said trusts or institution has been excluded from the total income on account of applicability of sub-clause (iv) or subclause (v) or sub-clause (vi) or sub-clause (via) of clause (23C) of section 10, or section 11 or section 12, for any previous year ending on or before the date of such application, at any time after the commencement of such activities.] - [and such trust or institution is regulated under Section 12AB] (b) where the total income of the trust or institution as computed under this Act without giving effect to the provisions of sections 11 and 12 exceeds the maximum amount which is not chargeable to income-tax in any previous year,- (i) the books of account and other documents have been kept and maintained in such form and manner and at such place, as may be prescribed; and (ii) the accounts of the trust or institution for that year have been audited by an accou....
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....C) while upholding Pinegrove's case (supra). The following substantial questions of law were framed in the appeals:- (i) Whether in the facts and circumstances of the case, the ITAT was legally correct in quashing the order dated 02.03.2010 passed by the CIT cancelling the registration granted u/s 12A merely on technical grounds and without going into the merits of the case as well as the intention of the legislation. (ii) Whether in the facts and circumstances of the case, the ITAT was legally correct in restoring the order dated 22.11.1993 passed by the CIT granting the registration u/s 12A of the Act, even when the order dated 02.03.2010 (supra) had been passed after recording that the assessee trust had not been carrying on any charitable activity but was engaged in profit making under the garb of education. (iii) Whether in the facts and circumstances of the case, the ITAT was legally correct in deducing that the Commissioner had no power to cancel the registration granted u/s 12A even when there was no such provision in the Act prohibiting the CIT from doing so. (iv) Whether in the facts and circumstances of the case, the ITAT was legally correct in observing that ....
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....ssed under Section 12A does not fall in the category of "orders" mentioned in Section 21 of the General Clauses Act. The expression "order" employed in Section 21 would show that such "order" must be in the nature of a "notification", "rules" and "bye laws" etc. (see -Indian National Congress(I) vs. Institute of Social Welfare & Ors., 2002 (5) SCC 685). 24. In other words, the order, which can be modified or rescinded by applying Section 21, has to be either executive or legislative in nature whereas the order, which the CIT is required to pass under Section 12A of the Act, is neither legislative nor an executive order but it is a "quasi-judicial order". It is for this reason, Section 21 has no application in this case. 25. The general power, under Section 21 of the General Clauses Act, to rescind a notification or order has to be understood in the light of the subject matter, context and the effect of the relevant provisions of the statute under which the notification or order is issued and the power is not available after an enforceable right has accrued under the notification or order. Moreover, Section 21 has no application to vary or amend or review a quasi-judicial orde....
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....t in the case of Director of Income Tax (Exemptions) vs. Mool Chand Khairati Ram Trust, (2011) 243 CTR (Del) 245, Uttaranchal High Court in the case of Welham Boys' School Society vs. CBDT, (2006) 285 ITR 74 (Uttaranchal) and Neutral Citation No: = 2024:PHHC:063836-DB Allahabad High Court in the case of Oxford Academy for Career Development vs. Chief Commissioner of Income Tax & Ors. (2009) 315 ITR 382 (All)." 18. Thus, we find that the facts were almost similar to the facts of the present case as in the aforesaid case Industrial Infrastructure Development Corporation (Gwalior) M.P. Limited's case (supra), the Commission had cancelled the registration under Section 12A of the Act dated 13.04.1991 by its order dated 29.04.2002 and on 29.04.2002 the Commissioner was not empowered to cancel such registration. In view thereof, the questions of law no. 1, 3 and 4 are answered in favour of the assessee on the basis of judgment in Commissioner of Income-Tax, Gwalior (supra). 19. So far as question no. 2 (supra) is concerned, the power of cancellation of registration granted under Section 12A of the Act is required to be examined in law of the recent judgment of the Larger Bench of Hon'....
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....he genuineness of the institution and the manner of its functioning, the Commissioner or other authority is free to call for the audited accounts or other such documents for recording satisfaction where the society, trust or institution genuinely seeks to achieve the objects which it professes. The observations made in American Hotel (supra) suggest that the Commissioner could not call for the records and that the examination of such accounts would be at the stage of assessment. Whilst that reasoning undoubtedly applies to newly set up charities, trusts etc. the proviso under Section 10 (23C) is not confined to newly set up trusts - it also applies to existing ones. The Commissioner or other authority is not in any manner constrained from examining accounts and other related documents to see the pattern of income and expenditure. (g) It is held that wherever registration of trust or charities is obligatory under state or local laws, the concerned trust, society, other institution etc. seeking approval under Section 10 (23C) should also comply with provisions of such state laws. This would enable the Commissioner or concerned authority to ascertain the genuineness of the trust, s....